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May 6, 2017: Montana: should we look West to learn how to manage exempt wells?

By Colleen Coyle

Montana water users are watching the growing water rights dispute in Washington, because Montana has looked at aspects of Washington’s approach to water rights as an example to follow.  Washington’s system of restricting exempt wells and offering developers the opportunity to acquire water for mitigation through water banks has been discussed for years as a blueprint for Montana: 

http://leg.mt.gov/content/Committees/Interim/2011-2012/Water-Policy/Meeting-Documents/September-2011/mitigation-banking-tu.pdf

Both Montana and Washington’s legal and regulatory structures try to balance and protect water rights for farmers, municipalities, development, tribes, and instream flows for fish and wildlife. The law in both states grants limited exemptions for well drilling too.  Washington’s Supreme Court recently issued a decision known as the Hirst ruling, which has effectively stopped rural property development in some areas by placing additional restrictions on wells that are exempted from the full water righs permitting process.

Articles with headlines like “War of the Wells,” “Hirst Decision by Washington Supreme Court Takes Away Water” and “Water-rights Ruling Leaves Rural Washington High and Dry” are turning up in the news every week: http://www.seattletimes.com/opinion/editorials/water-rights-ruling-leaves-rural-washington-high-and-dry/

In the last article, the Seattle Times editorial board recognized a common problem which is true in both Montana and Washington: rural home building has relied on exempt wells, and at times abused it. In the past in Montana, exempt wells were sometimes used for large subdivisions, even in more developed areas.  Both states have had court decisions impact the law in recent years.

Washington allows permit-exempt uses of groundwater for livestock, lawn and garden, domestic and industrial with a 5,000 gallon per day limit.  However, in basins with an instream flow rule (these were the facts in Hirst), the counties have to comply with the Growth Management Act and make an independent decision about legal water availability for the permit-exempt uses above.  http://www.ecy.wa.gov/programs/wr/nwro/hirst.html

In Montana, our exempt well rule allowed an exempt well for domestic or stock purposes a total of 35 gallons per minute, 10 acre feet per year, but landowners could have more than one well on a parcel so long as they weren’t connected and weren’t within 1620 feet of another appropriation. A Montana 2015 Supreme Court ruling in Clark Fork Coalition v. Montana Well Drillers Association (“CFC decision”) altered the rule.  As a result, any lot less than 20 acres created after October 17, 2014 is now required to share the 10 acre-foot exempt appropriation of the original lot.  So if a property owner subdivides a 40 acre parcel into four 10 acre lots, the subdivision could have four wells but the total appropriation of the four wells combined cannot exceed 10 acre feet- in a sense, exempt appropriations cannot grow beyond the volume of those that were available on October 17, 2014, except for lots over 20 acres.  DNRC requires a minimum of .28 acre foot per person, so the 10 acre foot limit can only be split so far.

In Washington, the Hirst decision requires counties to determine that water is available and also that an exempt well will not impact senior water rights prior to issuing a building permit with an exempt well.  This is much more strict and complex than Montana’s system.  After the decision, several Washington counties stopped issuing rural home building permits. As a result, properties that owners were counting on for investments or retirement suddenly became far less valuable because they were effectively without water.

Montana landowners in the Gallatin Valley are experiencing a remarkable increase in property value, even with the stricter rule in place after the CFC exempt well decision.  Whether the new ruling impacts property values remains to be seen.  Some rural landowners who do not plan to subdivide might appreciate some reduction in property value for tax purposes.  When economic downturns or difficult times occur, Montana farmers and ranchers have long relied on the ability to sell off a parcel of land in order to pay the bills, and sometimes that land is slated for subdivision.

All sides acknowledge that Washington’s approach turns out to be at least as much about land use as water use, by limiting use of property especially in rural areas.  Rural areas tend to rely on exempt wells because municipal systems and other public water utilities are generally not available as an alternative.  In both Washington and Montana, new permits for non-exempt wells are difficult to get, especially in closed basins, and in some ways it’s more difficult in Montana because we do not yet have a widely available system for water banking and mitigation.  Water users seeking a permit in a closed basin in Montana need to acquire or retire a similar amount of water to mitigate against the depletion of the proposed new permitted well, which takes significantly more time and cost than buying mitigation water from a water bank.

There is a bill passed by the Montana Legislature this session currently on the Governor’s desk to create a policy after the CFC decision.  HB 339 creates well spacing of 660 feet in closed basins, and two appropriations within 330 feet in open basins.  This would result in a maximum of about four exempt well appropriations on a 20 acre parcel in closed basins – not enough for dense subdivisions, but its supporters contend it’s enough to accommodate ag needs (such as a stock well and more than one domestic well on the same parcel)  and to allow some development to occur.  It was passed by the Legislature with nearly, but not quite, a 2/3 majority.

This issue has been presented to the Montana legislature every session since 2005.  The 2008 Legislature spent a substantial amount of time researching exempt wells, looking at systems in states across the West, and came to the conclusion that the best policy would be one that addresses the well issue with “scalpels” (limits in targeted areas based on science) rather than “sledgehammers” (statewide strict rules).  Targeted “scalpel” policies can be challenging to design due to the lack of data regarding groundwater supply.

The Montana Bureau of Mines and Geology (MBMG) provides data on wells and groundwater, along with other information such as geologic maps and publications, through the MBMG Data Center at http://www.mbmg.mtech.edu/datacenter/datacenter.asp. In addition, the MBMG Ground Water Assessment Program (GWAP) and Ground Water Investigations Program (GWIP) are actively working on groundwater investigations in Montana.  http://www.mbmg.mtech.edu

Is HB 339 an effort at the “scalpel” approach that Montana has been trying to find since 2008?  The plaintiffs in the CFC case opposed HB 339, and some are encouraging the Governor to veto the bill.   If it is vetoed, should Montanans continue under the current rule long term, or try yet again in two years at the next Legislative session? The Governor currently has 260 bills on his desk, including HB 339.   We are in suspense as we wait to see how this session’s efforts to find a solution will play out.

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